This essay was written a decade ago and is modified here. The thoughts still have value in helping students plot productive futures.
The higher education marketplace is special and unique and provides something unlike any other enterprise. But, it is a marketplace nonetheless. Universities are subsidized by the state and, therefore, are obliged to respond to the social and economic needs of the state. Unfortunately, that is not always the case. “The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of the masters.” – Adam Smith.
In 1970:
A gallon of gas could be bought for 36 cents. The average price in 2023 was $3.50, an increase of nearly 1,000%, according to the U.S. Department of Energy.
The average home price in the U.S. was $25,000. When the bubble burst in 2006, the price topped $300,000 and has now jumped to about $500,000, an almost 2,000 percent increase, says rocketmortgage.com. One ounce of Kellogg’s cornflakes cost 2.1 cents. Those same cornflakes are now 27.7 cents per ounce, an increase of 1,200%. Typical tuition and fees at public four-year institutions were about $425 per year, now approximately $9,700 per year, a more than 2,000% increase, according to Education Data Initiative. Adding salt to the wound, they say, “Between the 2021-22 and 2022-23 academic years, tuition at the average public four-year institution increased 1.6% (not so in The Texas A&M University System or at WT) and in the 21st Century, the rising costs of college have outpaced the rate of inflation by an average of 104.3% and by as much as 2,217%.” None of these prices are adjusted for inflation. If the market forces at work are similar across all enterprises, it appears that universities are like cornflakes.
While college prices rise, increases are not inconsistent with the costs of other goods and services in the marketplace. This is not to suggest that universities should relax or take comfort. A 2010 Goldwater Institute study reported that “Universities have in recent years vastly expanded their administrative bureaucracies, while in some cases actually shrinking the numbers of professors.” In the five years ending in 2007, enrollment rose by 14.5%, but administrators and bureaucrats per 100 students rose by 38%, and spending on non-teaching personnel by 66%. Current trends are not significantly different. U.S. News reports in a 2023 study that while administrative costs increase, investments in teaching decrease.
Prices, fueled by omnipresent loans for any student wanting one, and universities willing to accept any student with a loan, have allowed a form of leadership and management slovenliness to prevail, compounded by increasingly laborious reports purportedly to assure accountability. Adam Smith’s masters seem asleep at the switch and awakened only to personal proclivity rather than being purposefully responsive to market forces. All this is accompanied by a throbbing disregard for the welfare of the student shrouded in trumped-up national purpose and the social/economic benefit of college degrees for all. The appearance of accountability absent real results yields little to nothing except increased costs.
The Harvard Business Review suggests that a college degree may not be for everyone and that “work experience” has great market value. The brittle proposition that a college education is a cure-all is being tested in Smith’s contemporary marketplace. Good policy and action suggest that a student’s aspirations, skills, abilities and insights should guide their plan for a productive future. A one-size-fits-all framework is a limp cornflake.
Until recently, state and federal taxpayer funds flowed freely to universities to offset rising prices, meet social demand for a better-educated workforce, and, some would argue, inflate the cost of higher education just because the funds were there. In many states, post-secondary institutional funding is increased or decreased regardless of mission or effectiveness.
Gas, housing and cornflakes impact the cost of university operations, but labor costs—especially those of faculty and administrative salaries—account for the greatest increases, too frequently regardless of performance. To be sure, facilities add to the mix, some essential, such as libraries, classrooms, labs and technology, and some less critical but of value: athletics facilities, better housing, and improvements to the grounds. These are funded by long-term debt or the state, paid for by increased student tuition fees in the first case and tax dollars in the second. The Goldwater Institute suggests that disproportionately puffed-up salaries and administrative costs raise the price of college. Who can argue that? Smith’s masters may have lost track of purpose.
Our universities must responsibly serve authentic markets. Leadership should focus every ounce of attention on students and doggedly reward achievement.
Effective universities are not making or peddling cornflakes.
Walter V. Wendler, President of West Texas A&M University. His weekly columns, with hyperlinks, are available at https://walterwendler.com/.